Greece Comes Up With Collateral Loophole, Has Enough Cash To Roll €5 Billion Bill Maturity

Tyler Durden's picture


Over the past several days there had been concerns that even if Greece managed to roll its maturing €5 billion in Bills with a new Bill issuance (which it did earlier today), it would be unable to actually obtain cash for this worthless paper, through a repo with the European Central Bank. The reason being that last week the ECB allowed a temporary extension in Greek ELA collateral eligibility to expire, enacted on August 2, which in turn reduced the amount of repoable T-Bills from €7 billion to just €3.5 billion, in the process reducing the amount of cash Greece can obtain in half from the Bill roll. And while there had been lots of speculation and rumors that the ECB would, as in the case of Spain, either make a "mistake" or extend the collateral pool exemption once more, this did not occur. Instead, as we have just learned, the ECB has allowed Greek banks to use "asset-backed" securities to plug the collateral gap. Needless to say, one can only conceive just what unencumbered assets still can be found on Greek bank balance sheets (here is one artist's impression) but it was largely expected that in the race to debase its currency, the ECB would once again admit that when it comes to perpetuating the Ponzi, especially at a marginal cost of a token €3.5 billion, anything goes (just don't tell Germany). And so, Greece kicks the can once again.

From Bloomberg:

Greek banks will keep receiving the same amount of emergency central bank aid despite a reduction in the amount of treasury bills they can offer in exchange, a euro- area central bank official said.


The European Central Bank’s Governing Council last week allowed a temporary increase in the amount of T-bills Greek banks can pledge for so-called Emergency Liquidity Assistance to lapse, reducing it to 3.5 billion euros ($4.4 billion) from 7 billion euros, said the official, who was briefed on the decision. However, other acceptable collateral including asset- backed securities on banks’ balance sheets have increased in value enough to make up the difference, he said.

This is where Jean-Claude Juncker solemnly says "I was not joking"

It goes on:

Spokespeople for the ECB and the Greek central bank declined to comment.


Greece today sold a total of 4 billion euros of four-week and 13-week T-bills before a redemption of 5 billion euros of similar securities on Nov. 16. After the ECB’s decision to reduce the total amount of T-bills acceptable as collateral, banks could have faced funding difficulties unless they were able to find other acceptable collateral. Overall, Greece is trying to plug a financing gap of as much as 32.6 billion euros.


German newspaper Die Welt reported yesterday that the ECB would widen the pool of acceptable collateral to help Greek banks over the financing hump. The ECB later issued a statement denying the report, saying the collateral list hasn’t changed.

Bottom line: good enough to avert a default. The problem is that soon Greece will find itself needing to fund far greater bond maturities, in addition to rolling short-term debt, at which point the hilarious excuse that Greek "assets" have gone up in value will no longer cut it. And the worst news for Greece is that Europe's AAA club, in this case mostly the Netherlands (because Germany will kick and scream but in the end never jeopardize the ultimate beneficiary of the endless Greek bailout - Deutsche Bank) just said that not one additional penny of money will be given to Greece as there is a "big risk Greece will cost us extra money."

Of course it will.

The question, however, now is - just what creative shadow banking accounting gimmicks will Greece and the ECB use to literally hand over to Greece money for which there is no eligible collateral pledge, unless of course going forward the ECB demands a strip lien on Greek real estate, thereby starting to "sequester" Greek sovereign territory in exchange for payments that ultimately go to pay off debt held primarily by the... ECB.

One can also only hope that the Greek population never understands the true insidious nature of this creeping "bailout" which for three years now does absolutely nothing for Greek society as not one new penny enters the Greek economy, but all the money is merely recycled back into banker pockets with ever more liens being imposed on whatever Greek assets are still available.

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Tue, 11/13/2012 - 13:38 | 2976613 Mongo
Mongo's picture

So... there is still cash in Greece ...

Tue, 11/13/2012 - 13:42 | 2976627 AlaricBalth
AlaricBalth's picture

Bankers borrowing from other bankers to pay off still other bankers, with "absolutely nothing for Greek society".  Sounds like a sustainable plan to me. (Heavy Sarc)

Tue, 11/13/2012 - 13:44 | 2976632 Middle_Finger_Market
Middle_Finger_Market's picture

It's a ponzi within a ponzi within a ponzi...I mean when do we start cutting off peoples heads?

Tue, 11/13/2012 - 13:59 | 2976689 flacon
flacon's picture


Tue, 11/13/2012 - 14:02 | 2976701 john39
john39's picture

they securitized the children of the poor.

Tue, 11/13/2012 - 14:11 | 2976738 knukles
knukles's picture

Why not just exterminate (as in genocidal operation) the entire Greek population, call dibs on the whole country lock, stock and empty barrel, claim victory for Agenda 21, prize the gold teeth from the dead mouths of women and children, declare a triumph for population control, diminish carbon footprints without the fraud of offsets, let the beasts run free satisfying the PETA and Birkenstock crowds and whatever the hell else somebody wants promulgated, auction the whole fucking thing off to the highest bidder and then start anew with Spain.

Tue, 11/13/2012 - 14:40 | 2976851 Manthong
Manthong's picture

Hero icon of the liberal elite, George Bernard Shaw would go along with that approach. 

Tue, 11/13/2012 - 15:39 | 2977053 Pseudo Anonym
Pseudo Anonym's picture

who is "they"?

they securitized the children of the poor.

and dont worry; if you have a birth certificate or social security number - you too were "securitized" by "they".  you just dont know about it!

Tue, 11/13/2012 - 14:02 | 2976702 Tortfeasor
Tortfeasor's picture

Once you pop, you can' can' can't stop.

Tue, 11/13/2012 - 14:09 | 2976729 JPM Hater001
JPM Hater001's picture

And Europe closed green.

Thank goodness

Tue, 11/13/2012 - 18:23 | 2977770 Dugald
Dugald's picture

Did anyone really think the Bwankers would let Greece fall over, the victim is not yet sucked dry.......

Tue, 11/13/2012 - 21:21 | 2978303 Dareconomics
Dareconomics's picture

Well said

Tue, 11/13/2012 - 13:39 | 2976619 bigkahuna
bigkahuna's picture

Yeah, whatever.

Tue, 11/13/2012 - 13:39 | 2976621 Middle_Finger_Market
Middle_Finger_Market's picture

Sam shit different day. Buy the hope, sell the reality. Expect the appocalypse.

Tue, 11/13/2012 - 13:55 | 2976671 butchee
butchee's picture

Ummmmmm....the shit has all been used as collateral.  Sorry fan, you are just gonna have to meet someone new.

Tue, 11/13/2012 - 13:42 | 2976623 slackrabbit
slackrabbit's picture

the collateroll is their children...

Tue, 11/13/2012 - 14:11 | 2976650 Cognitive Dissonance
Cognitive Dissonance's picture

Slow roasted in a crock (of sh*t) pot, then severed served up steaming hot.

<Shame on us for allowing this to happen on our watch. Plenty of shared responsibility to go around.>

Tue, 11/13/2012 - 13:50 | 2976658 GolfHatesMe
GolfHatesMe's picture

Nope, Michigan bottle return run with Kramer and Newman.  Just doubled Greece's collateral

Tue, 11/13/2012 - 14:00 | 2976695 Cognitive Dissonance
Cognitive Dissonance's picture

They used the Fed's armored truck for the run to Michigan (not needed anymore since all the Fed's Gold is paper weight anyway) thus avoiding all those stupid fixed costs that without their removal would have gobbled up all the bottle return "profit".


Tue, 11/13/2012 - 14:13 | 2976743 Dre4dwolf
Dre4dwolf's picture

America collateralized their progeny back in 1933, look how well we turned out.

Tue, 11/13/2012 - 13:42 | 2976624 Ned Zeppelin
Ned Zeppelin's picture

The first in a long line, and along line to come, of "defaults averted."

Tue, 11/13/2012 - 13:44 | 2976631 Cognitive Dissonance
Cognitive Dissonance's picture

When one doesn't wish to deal with reality there are always available loopholes to create and exploit.

<That is.....until the last greater fool has been found and fleeced.>

Tue, 11/13/2012 - 13:47 | 2976645 Middle_Finger_Market
Middle_Finger_Market's picture

Or when the general population is dead. 

Tue, 11/13/2012 - 14:05 | 2976712 A Lunatic
A Lunatic's picture

Or at least the segment that doesn't want to turn a blind eye and play along..........

Tue, 11/13/2012 - 13:45 | 2976637 semperfi
semperfi's picture

The can kicking will continue until morale improves, or the war starts, whichever comes first.

Tue, 11/13/2012 - 13:46 | 2976638 Essential Nexus
Essential Nexus's picture

"asset-backed securities" ... Are Nazis assets now?

Tue, 11/13/2012 - 13:49 | 2976651 Middle_Finger_Market
Middle_Finger_Market's picture

Have they taken the gold?

Tue, 11/13/2012 - 13:46 | 2976640 williambanzai7
williambanzai7's picture


Tue, 11/13/2012 - 13:47 | 2976647 Middle_Finger_Market
Middle_Finger_Market's picture

Nailed it bru.

Tue, 11/13/2012 - 13:56 | 2976675 Uskatex
Uskatex's picture

But, but, but...

Venizelos looks having a vagina!?

Tue, 11/13/2012 - 15:15 | 2977002 NotApplicable
NotApplicable's picture

Look closer.

That, my friend, is a gunt.

Tue, 11/13/2012 - 19:33 | 2977953 MillionDollarBoner_
MillionDollarBoner_'s picture


I don't want to look...


Tue, 11/13/2012 - 13:56 | 2976676 IndicaTive
IndicaTive's picture

I really don't need the second half of my sandwich anyway.

Tue, 11/13/2012 - 14:14 | 2976749 GolfHatesMe
GolfHatesMe's picture

nothing goes with FUPA

Wed, 11/14/2012 - 05:37 | 2979090 StychoKiller
StychoKiller's picture

Hedonism Bot, how's it hangin'?

Tue, 11/13/2012 - 13:48 | 2976649 Yen Cross
Yen Cross's picture

 The Greeks have done a fantastic job of enslaving themselves...

Tue, 11/13/2012 - 14:07 | 2976717 A Lunatic
A Lunatic's picture

That's what they get for being stupid, fat, and lazy I guess...........



Tue, 11/13/2012 - 14:14 | 2976748 Yen Cross
Yen Cross's picture

   They should just jump the E.U. ship and bring back the drachma.

It would be a bitch in the beginning, but the currency devaluation (competitiveness) and sovereign freedom would be worth it in the end.

Tue, 11/13/2012 - 14:20 | 2976776 Skateboarder
Skateboarder's picture

That would require Greeks to come out of retirement at the old age of 25.

Tue, 11/13/2012 - 14:32 | 2976833 A Lunatic
A Lunatic's picture

At least it would be a controlled burn.

Tue, 11/13/2012 - 13:49 | 2976655 gamera9
gamera9's picture

No wiorries, loose change in the couch cushions will be used next.

Tue, 11/13/2012 - 13:52 | 2976662 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


The annals of history will look back on the time period between 2008 - 2013 and state, "it was the greatest can kicking the world had ever seen".

Tue, 11/13/2012 - 13:56 | 2976681 j0nx
j0nx's picture

Always another can to kick. When will people learn.

Tue, 11/13/2012 - 13:57 | 2976682 Kaiser Sousa
Kaiser Sousa's picture

off topic: but covered earlier by tyler....

can they make they make the manipulation of Silver any more obvious.... 

Tue, 11/13/2012 - 14:00 | 2976693 pleseus
pleseus's picture

It truely is amazing how far they can kick the can.

Tue, 11/13/2012 - 14:12 | 2976741 Skateboarder
Skateboarder's picture

Say hello to the newest Olympic sport... can kicking.

Tue, 11/13/2012 - 14:21 | 2976772 akak
akak's picture

And perhaps not too surprisingly, the various competitors are being left in the dust behind the Kenyans (or a certain Kenyan, anyway).

Tue, 11/13/2012 - 14:00 | 2976694 Bansters-in-my-...
Bansters-in-my- feces's picture

Can you say "Hocus Pocus"...?

Tue, 11/13/2012 - 14:30 | 2976703 Yen Cross
Yen Cross's picture

[Greece] ," it would be unable to actually obtain cash for this worthless paper, through a repo with the European Central Bank."

Forward> off to the "landfill", for some more ECB collateral.

Tue, 11/13/2012 - 14:04 | 2976707 El Tuco
El Tuco's picture

I can't read about Greece anymore. It has become a bad comedy. The fucker has been dead for years and everyone is still trying to revive it. Doesn't anyone have any dignity anymore and just say fuck it.

Got a buddy who says out of all the different people he has done business with the only ones where he is never able to close a deal with are the Greeks. He says you waste all your time and a lot of money trying to do business with them and in the end you get zero.


Looks like Europe will come to the same conclusion one day........

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